As Los Angeles faces both a housing shortage compounded by recent wildfires and unprecedented vacancy rates in downtown office buildings, office-to-residential conversions present an opportunity to generate needed housing while alleviating the financial solvency of office building owners and lenders.
These conversions, also known as adaptive reuse projects, often pose structural challenges that can hinder their viability. Yet by targeting properties with certain physical characteristics and leveraging recent amendments to the Los Angeles Adaptive Reuse Ordinance, which were adopted by the Los Angeles City Council in December 2024, adaptive reuse projects can offer feasible opportunities for owners and lenders to capitalize on high housing demand and revive underutilized office buildings in the city.
Structural Challenges to Conversion
Critical design differences between office buildings and multifamily housing can make adaptive reuse unworkable. Chief among these differences is the larger size of office building floor plates – the amount of rentable square footage on a given floor – which can make it more difficult for natural light to reach central areas of office space relative to the smaller floor plates of multifamily developments.
Many of today's office buildings were built in the mid-20th century, when the increasing prevalence of fluorescent lights and air conditioning permitted construction of wider floorplates to accommodate more space. As a result, costly structural interventions are often needed to convert offices into livable spaces with adequate natural light, and these conversions may significantly reduce the usable square footage. Moreover, particularly in the case of such older structures, office buildings may require extensive plumbing, HVAC and electrical retrofitting and asbestos remediation to meet contemporary building standards.
Office Buildings Suitable for Conversion
However, savvy owners and lenders may circumvent the challenges in adaptive reuse projects by investing in buildings with certain physical characteristics conducive to conversion. Midsize, midrise office buildings have narrower floor plates, so natural light can penetrate deeper into the space. Similarly, light enters more easily if two or more sides of the building face open space along a street, as it will not be obstructed by adjacent structures. Buildings with floor-to-ceiling windows enjoy the same benefits. Owners of buildings with these features may add or move walls to create individual units without needing to invest in retrofitting entire building structures.
Additionally, office buildings built during particular time periods are more suitable to adaptive reuse. Those constructed before World War II typically feature more windows, and their HVAC, plumbing and electrical systems are often already due for replacement. Thus, these buildings can be cost-effective for conversion because they do not require as extensive of retrofitting as mid-century buildings with large floor plates, and their owners need to upgrade their systems anyway. Conversely, buildings constructed in the last quarter of the 20th century or later are more likely to possess systems that meet U.S. code standards. Newer buildings that also feature adequate light access can allow for savings on renovations of building systems.
Adaptive Reuse Ordinance Updates
In Los Angeles, recently approved updates to the Adaptive Reuse Ordinance address barriers to adaptive reuse while incentivizing conversions of prime office buildings. Under the ordinance, conversion plans to remove internal space to create courtyards, new light wells or recessed balconies may reallocate the equivalent of the removed space outside the envelope of the existing building, thereby encouraging efforts to remedy a lack of natural light without eliminating rental space.
Moreover, while the previous iteration of the ordinance applied only to buildings built before 1974, the new ordinance expands by-right eligibility to structures that completed construction and were permitted as recently as 15 years ago. Consequently, buildings with modern systems better suited to conversion can receive expedited local approval by avoiding review under the California Environmental Quality Act (CEQA). Furthermore, the new ordinance removes minimum unit size requirements, allowing for more flexibility in creating residential units suitable to the building structure.
Next Steps
Office-to-residential conversions are a practicable strategy to cater to high housing demand and activate underperforming office space in Los Angeles, especially when applied to appropriate buildings and tailored to satisfy key updates to the Los Angeles Adaptive Reuse Ordinance.
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